Such measures involve in most cases drastically scaling back social spending and social safety nets - pensions, welfare, unemployment benefits - while raising taxes and privatizing formerly-public institutions. These actions inevitably fall the hardest upon those who most depend upon public services: the poor, the middle-class, minorities, students, the working class. In these tough economic times, citizens are told, governments and countries must endure "shared sacrifice" and to "live within their means". This narrative has been taken up by most of Europe's governments, the majority of whom are conservative, as well as the United States - despite having a Democratic President and Senate.
Though the austerity movement is pervasive and being attempted everywhere, it is not the answer. For nowhere is austerity working the way its proponents said it would. Indeed, it appears to be causing more harm than good, and coincidentally happens to be favoring the rich, big businesses, and corporations; though calls are made for "shared sacrifice", almost nothing of substance is being asked of the rich or corporations to contribute to the effort in scaling back.
The rich don't need pensions, welfare, or social security. The rich don't care if health care is reduced, as they are already healthy and can afford quality care if they need it. Corporations are making record profits and have no desire to see things change, as firing large sections of their workforce increases their profits while not reducing efficiency. At a time when the vast majority of society needs the essential services that government social spending provides, they are being told that it can no longer be afforded, and they must make do without.
It appears that this is partly a matter of priorities, and governments everywhere have shown that their main priorities are maintaining the banking and financial systems, which have cost billions and trillions of dollars to preserve. Though it was these institutions' reckless greed and irresponsible behavior that caused this global recession, the myth persists that it was the debt that caused the crisis, rather than the other way around. Nobody seemed to care about their country's debt before the global recession - why should it matter now? It matters now because it presents a fantastic opportunity for conservatives and neoliberals to radically transform society into what they hope will be a libertarian utopia. Trillions of dollars are put aside to salvage the financial sector, but in exchange, teachers must lose their jobs, workers have to give up more for the same benefits, education budgets must be drastically cut, and millions of people must reduce their quality of life - all because of a relatively small handful of people/organizations and their insatiable appetite for making more money.
Many proponents of austerity proclaim that cutting services, cutting debt, and cutting spending is the only way to shore up business confidence, and in this way the economy will grow by contraction. Yet this business confidence is nowhere to be seen, with the cruel effects of the cutting being shown in the millions of people in the United States who are now living on food stamps, unemployment benefits, and are without jobs. It can be seen in the rioting and mass protests in the United Kingdom, Greece, and France.
It seems that, despite widespread public opposition to such cuts, conservative and even leftist parties are agreed on this course of austerity.
In the United States, the Republican Party's objectives of dismantling the New Deal and returning the country to 1900-era standards of living are nakedly obvious; they are merely using the financial crisis (a crisis they largely helped to create) as a way to savagely exterminate the feeble American safety net of unemployment insurance, Social Security, Medicare, and Medicaid. This can be seen in the vast majority of states under Republican governors and legislatures, and all with disastrous results. The undemocratic breaking of unions in Wisconsin and Ohio, the destruction of unemployment insurance in Florida - these measures were not causes of the crisis, but are nonetheless being targeted merely because of the ideological opposition of radical neo-fascist Republicans. Such drastic spending cuts are sure to harm the economy, as most economists and even financial institutions such as Goldman Sachs say. Their argument is that the U.S. is spending too much, and so-called "entitlements" need to be reformed, that is, destroyed. This argument, for cutting spending, reforming the safety net, and balancing the budget, has largely been taken up by the Democratic Obama administration, as well as most Democratic state governors - despite there being an incredibly strong case to be made for running a deficit, raising taxes on the rich, fixing the corruption inherent in Wall Street and Washington, and reversing all of the negatives the Bush administration inflicted upon the country.
Republicans say the U.S. has a spending problem, but this could not be farther from the truth. Taxes are the lowest they've been for decades, with the vast majority of the $1.4 trillion deficit coming from Bush-era policies. Though the stimulus added some to the deficit, most of the rest of that has been because of the economy's decline, as more people require unemployment insurance, food stamps, health care, and so on. Neither the U.S. deficit or national debt are serious problems at the moment, despite all the rhetoric. The U.S. debt-to-GDP ratio is about average for industrialized countries, and while the $1.4 trillion deficit sounds large, the United States still has the largest economy in the world by far, at over $15 trillion. Interest rates are low and foreign governments still are more than willing to buy U.S. Treasury bonds; the deficit is not a problem. That extremely fiscally conservative Republican ideology has been largely embraced by President Obama and many other state Democratic governors and parties despite widespread popular opposition to such policies is worrying for the future of the United States.
In Great Britain, David Cameron's Conservative Party have embarked upon a radical agenda of draconian cuts to the British social safety net, despite dressing up the process in somewhat progressive terms. These cuts come amid mass demonstrations that oppose them, as well as riots against the raising of student fees and other cuts to vital social services. The opposition Labour Party has a large faction of Blairites who largely agree and accept the principle of the Conservatives agenda, thereby failing to present an alternative for the people of the United Kingdom. This comes at a time when the Labour Party should be more relevant than ever, as inequality in Britain is higher than it has been for decades - yet the party is more unfocused, diffident, and weakened that at any point in the last 20 years.
For the European countries that are requiring bailouts due to their financial situation, one can argue about the extent to which such measures are necessary, but what should not be debated is that these countries have lost their ability to democratically determine the course of action the people of those countries want to choose. The IMF, European Central Bank, and ratings agencies are a group of unelected, unaccountable private institutions whose agenda is clear. They have demanded that countries like Ireland, Greece, and Portugal embark upon severe and drastic austerity measures before they are able to give them the loans they need to help solve their distress. By applying essentially the same measures to each of those countries, regardless of the differences in their situations, these private institutions with leaders who no one elected are dictating the course of action that sovereign nations take, thereby undermining the democratic foundation of these countries' citizens' right to self-determination. Even when, for example, Greece employed such austerity measures as dictated to it by the IMF and ECB, their economy did not recover; in fact, its credit rating has continued to be downgraded while its financial situation shows little sign of improving - despite decreases in the quality of life for most citizens while also drastically and forcibly changing the Greek social landscape.
Austerity is not working. Austerity is not the answer. The best way to grow the economy and reduce debt is by putting people back to work. At a time when private-sector growth is anemic, and can no longer be relied upon to employ the same amount of people that it had before, the government must step in and directly stimulate the economy by massively spending on the employment of its citizens.
When asked what got the U.S. out of the Great Depression, most people will respond with "World War II". What was it about the war that put the economy back on its feet? Massive government spending on the military for several years, combined with much higher taxes on the rich. The United States debt-to-GDP ratio in the middle of World War II was 143%, incredibly higher than it currently is. But after robust economic growth following the end of the war, this was significantly reduced to a point where it was no longer an issue. So why are governments not treating this global economic crisis like World War II? Why not spend massively, not on tanks, rifles, and planes, but on housing, roads, bridges, and rail?
Germany is a good example of a country that has largely pursued a Keynesian economic course; the German government spent large amounts of money keeping their workforce employed, while also giving bailouts to companies on stringent conditions dictating what they could and could not use the money for. As a result, the German economy has grown far faster than any of their neighbors and employment has rebounded. The governing conservative-neoliberal coalition is planning on introducing a tax cut for middle-incomes and a tax hike for higher-incomes, due to the budget deficit being so low.
The money that was used to save the financial sector can also be used to save the middle-class. The beneficiaries of the bailouts need to give back to society what they took through their own negligence, corruption, and criminality. This is a time when public service and government social spending should be higher than ever, when the safety net is strengthened and enhanced, not destroyed. This is a time when people need their government to provide for them because no one else can. This is a time when the excesses of right-wing economic policy should be reversed and destroyed, not the opposite.
Austerity is not the answer. Democracy, citizens, and government are the answer.
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